Scenario 2Suppose that the full employment line FE is Y=50….

Scenario 2Suppose that the full employment line FE is Y=50. The desired consumption is Cd=18-30r+0.6Y, desired investment is Id=12-20r, the real money demand is Md=60-120r+Y. Suppose also that the government purchases are G=0, net exports NX=25-0.4Y-40r and nominal money supply is M=1000. Refer to Scenario 2. Derive LM curve for this economy. What is its expression?

Scenario 1Suppose IS curve for an economy is given as r=0.3-…

Scenario 1Suppose IS curve for an economy is given as r=0.3-0.25Y/6000 and LM curve is r=Y/6000 – 0.4/P. Furthermore, full employment level of output, Y(bar)=1500. Refer to Scenario 1. Suppose IS curve decreases to r=0.25-0.25Y/6000. What is the short-run value of output?